"The risks are greater where significant external funds support domestic lending," S&P said in a mid-year review of 22 Asia Pacific sovereigns rated by the agency.
"These economies are vulnerable to negative swings in sentiments among international lenders. This also means that these governments have little room for policy mistakes."
Earlier this week S&P confirmed Sri Lanka's B+ speculative grade sovereign rating, citing low inflation and gains in state enterprise balances.
On 5 parameters looked at by S&P Sri Lanka's Economic Structure and Growth was considered Neutral and Monetary Flexibility also Neutral.
But Institutional and Governance Effectiveness was considered a Weakness, Fiscal Flexibility and Performance a Weakness, External Liquidity and International inv